SBD/Issue 175/Franchises

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  • Hurricanes Hire Allen & Co. To Find Buyer For 50% Of Franchise

    Hurricanes Become Latest NHL
    Franchise To Seek New Ownership

    The Hurricanes "have hired Allen & Co. to sell 50 percent of the club, a move that makes the team the latest NHL franchise to seek new ownership," according to Daniel Kaplan of SPORTSBUSINESS JOURNAL. Hurricanes Owner Peter Karmanos, who controls 100% of the team, said, “My partner, Tom Thewes, passed away two years ago, and we have been putzing around trying to figure (out) how to replace the partner. We just went to Allen & Co. to explore the different ways. It’s certainly not to sell the team.” Allen & Co. Managing Dir Steve Greenberg is "handling the assignment." A source said that the search "will focus at first on North Carolina-based buyers" because part of the reason Karmanos, a Michigan resident, is selling is he "feels a need to have a local ownership presence." How a "50-50 partnership would be structured for the Hurricanes is uncertain" (SPORTSBUSINESS JOURNAL, 5/24 issue).  

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  • NHL Gives Glendale Dec. 31 Deadline To Find Buyer For Coyotes

    Glendale Must Find Buyer For
    Coyotes By Dec. 31

    Winnipeg's hopes to "get back in the NHL jumped again, as the league issued an ultimatum to the city of Glendale -- find a buyer for the Phoenix Coyotes by Dec. 31 or we will sell them to someone we have waiting to buy and move the team," according to David Shoalts of the GLOBE & MAIL. The NHL's mandate is included in an agreement completed Friday between the NHL and Glendale "in which the city agreed to pay" up to $25M of the Coyotes' operating losses for the '10-11 season. The agreement says the NHL has a "bona-fide offer from a viable purchaser who would relocate the hockey team to another market for the 2010-11 season." Glendale has until Dec. 31 to "find a buyer willing to keep the team at Jobing.com Arena," and after that date the NHL can "sell the team as it chooses." The pact notes the only way Glendale can keep the Coyotes after Dec. 31 is if it finds a local buyer and the league has "not yet entered into an agreement to sell the team in a non-Glendale sale and the city identifies a prospective bona fide purchaser." The city's "obligations to pay the Coyotes’ losses begin July 1 and run until the team plays its last game of the 2010-11 season." Glendale also signed an agreement stating that it will place $25M "in an escrow account with the Bank of America Merrill Lynch in Chicago or post a letter of credit so the league can begin drawing on it when the agreement begins" (GLOBESPORTS.com, 5/22). In Winnipeg, Gary Lawless reported True North Sports & Entertainment, led by Thomson Reuters Chair David Thomson, has "had the framework of a relocation deal in place with the league for some time, and is the third party the league is referring to" in the new agreement (WINNIPEGFREEPRESS.com, 5/22).

    ON THE CLOCK: The GLOBE & MAIL's Shoalts reported the "next step for the NHL is to work out a deal with one of the two prospective buyers for the Coyotes." White Sox and Bulls Chair Jerry Reinsdorf has been the "preferred buyer for Glendale city council, although it tried to re-open negotiations recently" with Ice Edge Holdings "after talks about an arena lease with Reinsdorf hit a snag." After agreeing to the $25M deal with the NHL, Glendale has to "contend with legal action" from Phoenix-based government watchdog the Goldwater Institute. Excessive public subsidies of private businesses are "illegal under Arizona law and Goldwater lawyers have said it is also illegal for a community to give a city manager the power to close a binding agreement with another party without public debate and a vote of approval from city council." However, a Goldwater lawyer last week said that the group "will not go to court until it sees a written copy of the deal between the NHL and the city" (GLOBE & MAIL, 5/22). TSN's Darren Dreger cited sources as saying that Glendale city officials "talked with representatives from Ice Edge Holdings" on Friday, but the ownership group "remains reluctant to engage in further discussions with the city without exclusivity" (TSN.ca, 5/22).

    Coyotes Fans Now Have Seven More
    Months Of Speculation About Team's Future

    MORE OF THE SAME: In Phoenix, Brahm Resnik noted local hockey fans now are "guaranteed up to seven more months of speculation about the team’s future." Coyotes fans have "just reveled in the best season in franchise history, played out amid questions that have lingered for more than a year about the team’s future in Glendale." Resnik noted it is "not clear how the agreement -- and the enduring uncertainty -- will affect the team’s efforts to sell season tickets, suites, advertising and marketing agreements" (AZCENTRAL.com, 5/22). YAHOO SPORTS' Sean Leahy wrote the "follow up season to the Coyotes' storybook run to the playoffs will once again be filled with relocation discussions and more news about the franchise's possible future in Winnipeg than the on-ice product." Leahy: "The clock is now ticking on the franchise's future in Phoenix. It will be interesting to see how much greater the fan support is at the start of next season after the team's successes this year. And with the December 31st date looming overhead, this long, drawn-out mess could finally be coming to an end" (SPORTS.YAHOO.com, 5/22).

    WORTH ALL THE TROUBLE? In Vancouver, Tom Mayenknecht cites a study from the Vancouver Sun and TheSportMarket.biz, which contends that if the NHL "relocated three of its weakest Southern U.S. franchises to Canada, their individual franchise values would increase" by more than 50% and the "league's average team valuation would jump" by $11M. The combined revenues of the three relocated teams would rise by $100M per year. The study shows "how the NHL, its member franchises, broadcast partners and other corporate stakeholders" would be "well-served if the NHL shifted its centre of gravity northward" (VANCOUVER SUN, 5/22). In N.Y., Larry Brooks wrote by keeping the Coyotes in Phoenix and "sacrificing immediate additional guaranteed revenue north of the border," NHL officials are "taking money out of the pockets of every player in the league without giving them, or their representatives in the NHLPA, a seat at the table or a voice in the process." This will be a "significant issue in the next round of collective bargaining." Commitment to retaining the Coyotes in Arizona "might be part of the league's strategy to get a more lucrative national television contract when the current one with NBC expires following next season." However, this is "still a gate-receipts league, one in which numerous teams -- including Atlanta, St. Louis, Florida, the Islanders and the Coyotes -- cannot generate revenue off ticket sales" (N.Y. POST, 5/23).

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  • Leonsis Indicates Wizards Could Change Names, Color Scheme

    Leonsis Has Not Decided About
    Changing Wizards' Name, Colors

    Incoming Wizards Owner Ted Leonsis Friday said that he has yet to decide "whether to change the team's color scheme and nickname," but acknowledged that he has "heard from fans" on the issues, according to Dan Steinberg of the WASHINGTON POST. The franchise changed its name from the Bullets to the Wizards prior to the '97-98 season, but many fans have "requested a return to the red, white and blue color scheme used when the team was known as the Bullets." Leonsis' Capitals returned to "their original colors beginning in 2007, and the change -- combined with the team's increased success -- sparked a surge in merchandise sales." Steinberg noted there was "mild applause" from the crowd at a National Press Club luncheon Friday when Leonsis "was asked about the possibility of a similar change for the Wizards." He said, "I probably will like red colors more than the teal blue that they have, but there's a lot that goes into it. And I intend to listen to people, but I also think Mr. Pollin made a personal decision, and I want to understand it, and I want to pay the appropriate respect that a decision like that would deserve" (WASHINGTON POST, 5/22). Leonsis Friday said that he "plans to start out his NBA ownership 'as an idiot savant,' talking to every person in the company and every owner in the league." He noted that his "personal interactions with fans -- particularly through e-mails -- that have made him such a popular NHL owner will carry over to the NBA" (AP, 5/21).

    BUILDING THE WALL: The Wizards own the No. 1 pick in next month's NBA Draft, and in Boston, Gary Washburn wrote the selection of former Kentucky G John Wall "would give the franchise instant credibility and bring life back to Washington basketball." Leonsis said, "Washington is a basketball city, and we have seen with the hockey team how great a first pick is, especially if he is of a worldly talent like Alex Ovechkin." He added, "It gives us hope, and that’s really what you want, especially with the transition into new ownership. You are trying to pay homage to the past but you are trying to do the right thing by the fan base" (BOSTON GLOBE, 5/23).

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  • Tangerine Dreams: EPL Move Brings Blackpool Financial Windfall

    Blackpool Will Make At Least $57.5M
    From Premier League Funds Next Year

    English soccer club Blackpool won promotion to the EPL with a 3-2 victory over Cardiff City on Saturday, guaranteeing the club the "biggest windfall in global sport from the outcome of a single event," according to Nick Harris of the LONDON TIMES. Blackpool will receive about $136.5M (all figures U.S.) in the form of new income in the coming seasons as a result of their promotion to the EPL. Blackpool will make at least $57.5M "from central Premier League funds next season, even if they finish bottom and are relegated." Portsmouth, who finished last in the EPL this season, earned $45.7 in central funds, "but new TV deals covering 2010-13 kick in this summer," and sources expect the bottom club's central funds income to be more than $57.5M next season. Blackpool can expect to make an additional $10.1M "in extra income from ticket sales, sponsorship deals and other commercial earnings during a one-year stay" in the EPL. If the club is relegated next season, it will earn another $69.0M "in parachute payments over the next four seasons." Harris noted Blackpool's 12,555-seat Bloomfield Road stadium "will be the smallest ever" in the EPL, but there are "sound reasons for believing they will make as much new ticket and commercial income" as recently promoted teams Stoke City and Hull City. Blackpool averaged only 8,600 fans this season, and it "can be assume they will play to sell-out crowds (up more than 40%) next season, and they will charge higher prices." Corporate income also will "increase, as will the value of sponsorship deals, and the amount the club can make from perimeter ads because they will now be part of a global TV product" (LONDON TIMES, 5/23). In London, Rory Smith noted promotion means the chance to "boost the capacity of Blackpool's ramshackle, homely stadium to 16,000," and will also mean an "entirely new infrastructure at a club where the players still wash their own training gear and clean their own boots" (London TELEGRAPH, 5/23).

    NEW CONTENDER: In London, Ben Marlow reported Nigerian businessman Aliko Dangote is "plotting to buy a stake in Arsenal in a move that could trigger a full-blown takeover battle" for the club. Dangote "in is in talks to buy the 16% stake being sold by Lady Nina Bracewell-Smith." He is "thought to have made it on to a shortlist of about 10 investors, drawn up" by U.S.-based private equity group Blackstone, which is seeking a buyer for the stake. Dangote is a "passionate football fan and has the wealth to compete with" Arsenal investors Stan Kroenke and Alisher Usmanov. But sources said that Kroenke "is the favourite to buy the holding" (LONDON TIMES, 5/23).

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  • Minor Setback: Lakers' D-League Affiliate Taking One-Year Hiatus

    The D-League L.A. D-Fenders "will take a one-year hiatus and will no longer use Staples Center" as their home, according to Mike Bresnahan of the L.A. TIMES. The team is "expected to reemerge at a different Southern California venue for the 2011-12 seasons." Lakers Owner Jerry Buss, who bought the D-Fenders in '06, "will retain ownership" of the team. The D-Fenders "generated no revenue from ticket sales because the only people allowed to attend their home games were those who bought tickets to Lakers home games." Games typically began "four hours before a Lakers game," and they often drew crowds of "fewer than 100 people." D-Fenders CEO Joey Buss: "When we got into the D-League, we took full advantage of the basketball opportunities. We want to take time to look at how we can maximize the investment on the business side as well. The goal is to bring them back for the 2011-12 season." Bresnahan noted it is unknown which D-League team the Lakers "will use next season, though they probably will share a club with two or three other NBA teams" (L.A. TIMES, 5/22). FANHOUSE.com's Matt Moore noted the D-Fenders "need a revamp to their image and business model." Relocating to a suburb of L.A. "would be ideal in an attempt to replicate the success of the smaller market D-League teams." Moore: "The D-League teams with ticket sales success have built strong local sponsorship and marketed to families. Both of these things are hard to accomplish at Staples with both the timing of the games and the fact that events at Staples price the crowd and sponsors out of it" (FANHOUSE.com, 5/22).

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  • Franchise Notes

    The MLB Rangers today announced a plan to facilitate completion of the sale of the team to the group headed by Chuck Greenberg and Nolan Ryan. The sale of the club and its lease of Rangers Ballpark in Arlington, together with the separate sale of the land around the ballpark, have a total sale value of around $575M. The Rangers have requested that a hearing be held in 45 days to confirm the proposed sale and plan of reorganization. The sale is expected to be completed by mid-summer, subject to court approval, which will allow the franchise to exit the Chapter 11 process. The sale should not impact the Rangers' baseball operations (Rangers).

    FREE AS A BIRD: In Baltimore, Peter Schmuck wrote it was fair "to scratch your head" when Orioles Owner Peter Angelos last week said that the success of the Nationals "is a good thing for his struggling team." Angelos said, "What's good for the Nationals is good for MASN. That makes me happy, and that makes (Nationals principal owner Ted Lerner) happy. They are partners in the MASN network. The better they do, the more interest it generates." Schmuck noted there is "nothing wrong with that statement from a business standpoint," but the problem is "more one of appearances." Orioles fans have "always been led to view MASN as a revenue-generator for the O's, but Angelos' comment appears to be an admission that he thinks it's the other way around" (Baltimore SUN, 5/23).

    Some Believe Boston Sports Culture Is Shifting
    Toward Celtics, Away From Red Sox
    CELTIC PRIDE: In Boston, Eric Moskowitz in a front-page piece notes after a "decade defined by the Red Sox," some believe that the sports culture in Boston is "shifting, if just a bit," in favor of the Celtics. Red Sox hats "still abound around town," but TV ratings are down 30% from '09 and "empty seats dot the stands" at Fenway Park. At the same time, "Celtics gear is front and center again" and TD Garden "positively crackles with electricity." Celtics Managing Partner Stephen Pagliuca: "People are just really excited everywhere I go, and the Garden has never been more loud than it is now" (BOSTON GLOBE, 5/23).

    TIME TO BE REALISTIC: In New Jersey, Dave D'Alessandro wrote, "We think everyone might be missing something that might be relevant about Mikhail Prokhorov: This guy knows less about the NBA than Bruce Ratner did when he showed up, and you know how that turned out." The incoming Nets owner "is as ignorant as anyone we’ve ever encountered that had some connection -- big or small -- to the NBA." When it comes to the league, Prokhorov has "about as much knowledge as one can fit in an average thimble." D'Alessandro: "And nobody else seems to give a damn about this, which we find a bit strange" (Newark STAR-LEDGER, 5/22).

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